New Manufactured Housing Bill Challenges the Independence of Standards
Development and Regulation

Pending legislation sets an undesirable precedent for government
regulators and private sector standards development organizations,
according to ASME Internationals Nelson Milder.

We may soon long for the halcyon days of yesteryear, when standards
development in the United States was a collegial activity among
like minds, or at least among minds that fully understood the
process as practiced for many decades. Standards development organizations,
fully private enterprises, structured into open and transparent
committees, boards, or technical groups, reach consensus on the
best way to standardize products, processes and operations so
as to ensure public safety and consumer protection. In the United
States, these standards are voluntarily incorporated into manufacturing
or operations and maintenance activities by industry. Sometimes
these standards are adopted into regulations issued by state or
federal government agencies, thereby becoming legally binding
requirements.

In the United States, development and promulgation of these private
sector, voluntary consensus standards has been closely linked
to, but independent of, the regulatory process. Regulation, a
legislatively mandated activity assigned to state or federal government
entities, is under the control of government. Standards development
and conformity assessment have been activities under the purview
of private sector functionsat least as these functions relate
to commercial enterprises. As is well known, government agencies
often incorporate these private sector standards into their regulations.
In fact, legislation signed into law in 1996(1) and subsequent
guidelines to federal agencies issued by the Office of Management
and Budget(2) have established ground rules for the federal governments
use of private sector standards. As a result, there is a highly
successful cooperative relationship developing among government
agencies and the private sector.(3)

But this may all change as a result of legislation now moving
through the U.S. Congress.

The American Homeownership and Economic Opportunity Act of 2000
(HR 1776) passed in the U.S. House of Representatives on April 6 and has
been referred to the Senate. A related bill in the U.S. Senate,
The Manufactured Housing Improvement Act, (S 1452) has passed the Senate Banking, Housing, and Urban Affairs Committee.
Title XI of the House bill incorporates many of the features of
the Senate bill with some notable exceptions.(4) The House bill,
which is broad in scope and has bipartisan support, is intended
to facilitate the ability of all citizens to acquire adequate,
affordable housinga truly admirable and essential goal.

The implication of these developments to the standards community
is embodied in Title XI of this major legislationthe provision
associated with the manufactured housing industry. A short review
of the story behind Title XI will put this into perspective.

Manufactured Housing Standards

The term manufactured housing has undergone an evolutionary
change. A quarter of a century ago, the first code governing this
industry was issued by the U.S. Housing and Urban Development
(HUD) agency, and applied specifically to trailer homes. Subsequent
developments in technology, building materials and construction
methods expanded manufactured housing to predominantly encompass
permanent structures that contain most of the amenities found
in site-built homes, according to the Manufactured Housing Institute.
That is, manufactured housing includes homes and dwellings that
are not stick-built (i.e., constructed at the site), but which
are built off-siteusually in a factoryand trucked to the building
lot where they are installed.

The statistics are impressive. According to the Manufactured Housing
Resource Center and the Manufactured Housing Institute, approximately
18 million peopleover 7 percent of the U.S. populationare permanent
residents in 7.3 million manufactured homes. Manufactured homes
now account for more than a third of all new single-family homes.
In 1995, retail sales in this industry were estimated at $11.9
billion. Last October, the American Association of Retired Persons
(AARP) testified before a congressional committee that over two
million seniors live in manufactured homes. The average cost of
these homes in 1994 was $33,500, clearly a bargain in todays
real estate market.

The law governing standards for this industry dates back to the
National Housing Construction and Safety Standards Act of 1974,
when the industry primarily manufactured trailers and mobile homes.
HUD issued its code governing this industry at that time and,
of necessity, this code primarily covered the mobile home industry.
But as noted, the industry has expanded to include more than trailers
and mobile homes. Construction and safety needs have changed,
and technologies in construction and safety associated with this
industry growth have advanced. Clearly these changes all argue
for a complete upgrade of the 1974 code. And indeed, a National
Commission on Manufactured Housing has for several years recommended
revisions; but as yet HUD has been slow to act upon these recommendations.
Thus a frustrated alliance of manufacturers, consumer advocates,
suppliers and others has sought a political remedy to this problem,
resulting in an aggressive legislative approach. HR 1776 and S
1452 are the embodiment of their efforts.

So we have a situation not unlike that many in the standards development
community are facing in their efforts to work with federal agencies
to upgrade code references to outdated standards. But here the
similarity ends. The SDO community seeks to resolve the disparity
in federal code references through the implementation of Office
of Management and Budget (OMB) Circular A-119 and the provisions
outlined in Section 12 of the National Technology Transfer and
Advancement Act of 1995 (P.L. 104-113). The manufactured housing
community and their congressional supporters, however, have introduced
Title XI of the American Housing and Economic Development Act
of 2000 that promotes a different, and potentially conflicting,
tactic.

Now lets examine the provisions of Title XI that in my opinion
are cause for concern in the standards development community.

Title XI (HR 1776): Manufactured Housing Improvement Act

A stated purpose of this provision is to amend the 1974 law to
establish a balanced consensus process for the development, revision,
and interpretation of Federal construction and safety standards
for manufactured homes and related regulations for the enforcement
of such standards. To accomplish this task, the bill would vest
in the Secretary of HUD authority to establish, by order, appropriate
Federal manufactured home construction and safety standards in
accordance with the consensus standards development process.

Although no direct reference is made to the private sector consensus
standards process, other provisions refer to the procedures approved
by the American National Standards Institute. The Secretary can
exempt this requirement in cases of emergency as described in
the bill.

Paragraph 2 of Title XI, Consensus Standards and Regulatory Development
Process, establishes the framework for an administering organization
to be contracted by HUD to manage the establishment and functions
of a consensus committee. This administering organization is
defined as the recognized, voluntary, private sector, consensus
standards body with specific experience in developing model residential
building codes and standards. The consensus committee is prescribed
in a separate section of Title XI. It is given unprecedented authority
to develop, recommend, and review the process of incorporating
standards into Federal regulations issued by HUD. The legislation
vests in the administering organization and the consensus committee
extensive influence over the regulatory process. These include
selecting committee members (21), subject to HUD approval. The
administering organization would recommend to HUD the organizations
to be represented (in accordance with prescribed guidelines for
balanced representation by producers, users, public officials
and other stakeholders); and sets a one-year time limit for the
secretary to accept or reject the consensus committees recommended
code changes. Should HUD fail to meet this time limit requirement,
the consensus committees recommendations would be adopted into
regulation.

This brief summary should be sufficient to provide a sense of
where this is heading, so I shall stop here and refer the reader
to the complete legislation. Now the question facing the standards
community is, are there long-term implications of this bill to
the private sector standards development process, perhaps beyond
the specific application of this legislation to HUD and the manufactured
housing constituency?

I believe there are, and I will summarize my thoughts on the issues
of concern.

Why We Should Care

Although the manufactured housing communitys motivation for promulgating
this legislation can be well understood by SDOs who have labored
to keep current the references to their standards in federal regulations,
there are indeed some ominous threads woven into the fabric of
this legislation that could profoundly alter the long-standing
cooperative, but separate, relationship among government regulators
and private sector SDOs. Some of the contentious issues facing
both groups emanating from Title XI of HR 1776 are listed here.
-- The commingling of the activities of the consensus committee
and the government in the language of the
bill has blurred the boundary between the processes of standardization
and regulation.
-- The legislation would simultaneously diminish the private sectors
independence and effectiveness as standards developers, and HUDs
role as regulator. From the SDO perspective, the law would: 1)
interject federal control over the selection of consensus committee
participants, 2) limit interested groups participation to 21
members (presumably for balance; but it could be argued that,
the proposed committee membership structure would not ensure a
balanced representation), and 3) limit participation of a multiplicity
of standards developers in offering standards options by contracting
one SDO as an administrative organization. HUD would be required
to: 1) seek confirmation from a non-government operated
entity to implement regulatory actions, and 2) fund the agencys
operation of a standard promulgation and regulatory organization
through cost off-setting fees from the manufactured housing industry,
thereby providing a fiscal link between regulators and the industry
being regulated.
-- Providing federal support for the participation of certain
Consensus Committee members opens to question the independence
and bias of these members.
-- The bill ignores existing Public Law 104-113 that provides
for the cooperative interface among federal agencies and the private
sector standards development community.
-- The legislation fails to acknowledge that the private sector
standards development community is already structured to address
the concerns of the manufactured housing community. This structure
and the procedures embodied in this structure have successfully
operated for decades, and in some cases, for over a century.
-- Finally, the bill sets a precedent that could result in similar
legislation being proffered to Congress by other industries or
interest groups for imposition on other federal agencies.

In Conclusion

A letterjointly endorsed by ASTM, ASME, and other SDOs has been sent to
Congressional leaders7 expressing the groups concerns regarding
the bills provisions. The letter prompted the leadership of the
House Science Committee to send a letter(5) to the House Banking
and Financial Services Committee, noting the bills inconsistency
with Section 12 of P.L. 104-113. They requested that the Committee
strike or amend the legislation in a manner that conforms with
(the law). No matter what the final outcome, it is essential
that the standards development community be aware of the contentious
implications of this manufactured housing reform initiative. The
community must continue to work within the guidelines set by the
National Technology Transfer and Advancement Act and OMB Circular
A-119. We must encourage federal agencies to update their regulations
in accordance with private sector voluntary consensus standards
protocols, consistent with the needs of industry and the general
public. //

References
1 The National Technology Transfer and
Advancement Act of 1995 (P.L. 104-113),
Section 12
2 Office of Management and Budget, Executive Office of the President,
Federal Participation in the Development and Use of Voluntary
Consensus Standards and Conformity Assessment Activities (OMB
Circular A-119, February 10, 1998)
3 Subcommittee on Technology, Committee on Science, U.S. House
of Representatives, Hearing on Standards Conformity and the Federal
Government: A Review of Section 12 of Public Law 104-113, March
15, 2000.
4 Congressional analysis, Comparison of House and Senate Bills-Manufactured
Housing Reform (April, 2000)
5 Committee on Science letter dated Feb. 14, 2000.

Copyright 2000, ASTM

Nelson L. Milder
is senior policy advisor for Government Relations, ASME International
(the American Society of Mechanical Engineers). Prior to joining
ASME, Milder served as professional staff to the Science Committee
of the U.S. House of Representatives.